Why big companies use employment agencies?

[C.J.Couriers Professional]

Because courier business that I was working in did not survive recession, I became an average individual that is looking for some job. I was looking for work in warehouses or some driving jobs, these are the only places that I have formal working experience, even if I am more than capable of doing any office work. During two weeks time I have visited number of different places, working one day here, other day there, working on behalf of one of many employment agencies.

When I was going back home after some night shift, I came with this idea - why big companies are using employment agencies? Answer is obvious - because they have got cheap labour available 'on request', so there are no commitments. I thought, what if company X would employ me directly as a self employed warehouse operative, instead of using agency and paying agency fees? If I get from agency £6-£6.5 per hour, they surely get at least £8-£8.5 per hour from company that they send me to. So why not to employ somebody directly, it can't be more complicated for they that it already is, I would send them invoice as agency would do and they would save money on agency fees - everybody happy.

Do I miss something in my way if thinking? Companies employ self - employed drivers and many other professionals, but some professions seems to be missed.
And a second part of the idea - what if somebody (like me ) would create a web site that would a place where potential employers and self employed individuals would meet, do you think something like that could work? Maybe this could be some idea to help people find at least temporary work during recession time.

 

[benjamin_c]

sounds like a good idea in theory, and in some cases it's much more than £8.50 an hour, it's worth looking into

 

[genuineoptimist]

Do I miss something in my way if thinking? Companies employ self - employed drivers and many other professionals, but some professions seems to be missed.
And a second part of the idea - what if somebody (like me ) would create a web site that would a place where potential employers and self employed individuals would meet, do you think something like that could work? Maybe this could be some idea to help people find at least temporary work during recession time.

Companies all over the world want to 'rationalize' their vendors, meaning reduce the number of vendors they deal with. Your idea goes directly in the opposite direction. You are trying to increase the number of vendors; please remember that any individual service provider is just a vendor to the company and dealing with them is an overhead. So, sorry to be blunt, this doesn't sync with the current times.

Maybe you can start a company (say COVERALL plc.) that is an umbrella outfit employing miscellaneous workmen like drivers, janitors, cooks etc and send them out on jobs. This way any company can only deal with COVERALL for all their misc contractor jobs; now this is going with the current trend.

Hope I made some sense.

 

[C.J.Couriers Professional]

It made a lot of sense actually I knew that it cannot be so simple, that is why I asked all of you for opinions.

There is already a number of web sites offering this kind of services, you can find a local self employed plumber, accountant etc. I just noticed that there isn't a place for drivers and warehouse staff where they can post their availability.
And if I would do it in the way that you suggest, would I not become just a kind of another employment agency ?

 

[benjamin_c]

It made a lot of sense actually I knew that it cannot be so simple, that is why I asked all of you for opinions.

There is already a number of web sites offering this kind of services, you can find a local self employed plumber, accountant etc. I just noticed that there isn't a place for drivers and warehouse staff where they can post their availability.
And if I would do it in the way that you suggest, would I not become just a kind of another employment agency ?

in theory you would but if you was only online based like you said you could keep costs very low and only charge about £0.50 to £1.00 per hour of commission for example, or a little more if you was to do all the payroll via paye ect, so if the companies where paying £7.50 to you per hour then you paid £6.50ish to the self employeed people, this is a very competitive price and you still stand to make a fair amount of money from it

 

[KidsBeeHappy]

in theory you would but if you was only online based like you said you could keep costs very low and only charge about £0.50 to £1.00 per hour of commission for example, or a little more if you was to do all the payroll via paye ect, so if the companies where paying £7.50 to you per hour then you paid £6.50ish to the self employeed people, this is a very competitive price and you still stand to make a fair amount of money from it

No you don't.

You pay £6.50 to the employee.
You pay 11% (or is it 12%) to the government for Employers NIC.
You pay x to the insurance company for public and employers liability.
You pay x to someone to ensure that you have health & safety procedures in place to ensure that you comply with the terms of your insurance policy
You pay x to an insurance company to ensure that you are protected against (sometimes) fabricated claims from employees.

Have you made a profit yet with your £7.50???

It is so easy to cry against "extorionate" markups by temp agencies. But that's mainly from the agency workers and "business" people who simply don't have a true understanding that the costs of employment are more than the basic hourly wage rate - which in the main are those that have never employed someone.

 

[KidsBeeHappy]

CJ; for warehousing, distribution & drivers, Manpower has a UK wide coverage with a branch in most towns and dedicated driver branches (don't forget that the agency needs to ensure that their workers are working within the terms of the european working directive, mobile workers, legislation.

Also, premier people work mainly in the northern half of the country (ie above birmingham - if that's half) and cover the same type of staff.

 

[C.J.Couriers Professional]

I never wanted to become employer and to deal with paye and all this stuff, I was more thinking about creating a platform where two sides can meet and possibly avoid some unnecessary costs.

If I am a self employed person I am responsible by myself for NIN and tax, so the only thing that company employing me has to do is to pay for the invoice that I will send them. So instead of paying agency £8-£8.5 they can pay me directly lets say £7 per hour and we are all happy.

 

[KidsBeeHappy]

So more of a work exchange type website?

That could be interesting..........

You'd need to be very careful with T&C etc so it was clear that you/the website wasn't the employer.

EG; if you're invoicing the gross cost, you're providing the service, you're invoicing for their labour, you're paying the employee, therefore you must be the employer.....

 

[Richie N]

In my opinion this wouldn't work, an employee currently costs £7.24 including NMW, Holiday Pay and NICs.
Large companies go to agencies for flexibility, volume, service, ease of accounts and payroll etc, not to mention skills and quality candidates.

There is a lot more to setting up an agency if you want to go down this route, as you need to know about employment legislation for starters...

 

[C.J.Couriers Professional]

Yes, kind of work exchange web sites. There are already 3-4 at least on the market but all of them are missing certain professions and they work in different way that I am thinking about. I would like to combine the simpleness of taking people from agencies (payroll, NIN, flexibility) and the way that work exchange web sites function.

It is still not a clear idea but I think that little bit of work and thinking and I could find something that others missed

 

[Hillyer]

Good idea CJ, and well done for posting about it.

You seem to be taking on a lot of criticism, both constructive and destructive. It does seem like a lot of work and research needs to go into it.

Personally, I don't think it will work. I don't think it can be defined as "a place for self-employed to meet employers". I think that employers would rather go to a prestigious company/website and pay more for a good service (not necessarily a better service than you, but they know it will be a good service). The employer will know the company and will know that the placements that are put forward are good placements.

I don't think that there is anything wrong with you pushing your idea forward some more, and looking into how you can get it working. I think it will need a lot of funding. You will need to get a lot of 'self-employed' users before employers will consider looking there for them. But the 'self-employed' won't be too keen to join up if there are no employers! ;]

- Hillyer

 

[C.J.Couriers Professional]

Good idea CJ, and well done for posting about it.

You seem to be taking on a lot of criticism, both constructive and destructive. It does seem like a lot of work and research needs to go into it.

Personally, I don't think it will work. I don't think it can be defined as "a place for self-employed to meet employers". I think that employers would rather go to a prestigious company/website and pay more for a good service (not necessarily a better service than you, but they know it will be a good service). The employer will know the company and will know that the placements that are put forward are good placements.

I don't think that there is anything wrong with you pushing your idea forward some more, and looking into how you can get it working. I think it will need a lot of funding. You will need to get a lot of 'self-employed' users before employers will consider looking there for them. But the 'self-employed' won't be too keen to join up if there are no employers! ;]

- Hillyer

Thanks for comments Hillyer. I am not saying that I have ready idea and I am just looking for confirmation that it will work great, I am more interested in peoples opinions and their thoughts on it. And I am not worried about advertising and getting people to sign for the site, we cannot underestimate power of things like YouTube, Twitter and Facebook - if the idea is right, people will sign in, no worries about it. Well, apart of finding the right idea

 

[RLD Plastering and Tiling Services]

I think that some people are losing the point of the OP or is it me.

I think the question the op wanted to know is would it be feasible for eg.

Mr.driver- puts his details onto a website stating his work experience driving,taco experience,multi drop experience etc and the areas he would like to work and hrs available

Company A- Instead of using an employment agency and paying agency fees they visit the website and see the details for all available workers on there and then contact Mr driver direct and employ him on a self employed basis.

The website only acts as an introduction and does not employ people themselves so they should not deal with NI or employer liability insurance.

Downsides I can see are

1) where or how the website would make money
2) employers would still have to do the the interviewing themselves

Thanks

 

[Geoff T]

I can also see a possible problem with perceived credibility....

What's to say the self-employed people on there are reliable? Would you have to think about a code of practice or something?

 

[C.J.Couriers Professional]

You are absolutely right James

Profit can be made in many different ways, for example, subscription fees from self employed registered members.
I was thinking about creating kind of portfolios presenting all the things that s.e. person has to offer, experience, maybe some samples of work or pictures from previous jobs created plus of course rating system with feedback from previous clients, in this place it would be little bit similar to what already existing work exchange web sites offer.

 

[Richie N]

I think that some people are losing the point of the OP or is it me.

I think the question the op wanted to know is would it be feasible for eg.

Mr.driver- puts his details onto a website stating his work experience driving,taco experience,multi drop experience etc and the areas he would like to work and hrs available

Company A- Instead of using an employment agency and paying agency fees they visit the website and see the details for all available workers on there and then contact Mr driver direct and employ him on a self employed basis.

The website only acts as an introduction and does not employ people themselves so they should not deal with NI or employer liability insurance.

Downsides I can see are

1) where or how the website would make money
2) employers would still have to do the the interviewing themselves

Thanks

If they wanted to hire self-employed only, they can advertise this on any job board or with the job centre direct, why would they use a specific site for this, when other sites are free....

Also, the IR are monitoring self-employed people a lot more, as some employers see this as an escape route of paying NICs, Holiday pay etc.

 

[karterbezon]

Hi Friends,
The thing is that the big companies sometime have a huge requirements with them and the IT recruitment agencies have a database of job seekers. So the Big companies can hire a candidates with good knowledge. These candidates have cleared the agencies test so it become easy for company to get good candidates I also got placed through an IT agencies. With me there were 40 more candidates who got placed.